internal control vocab acc ch. 6

Establish Responsibilities

Responsibility for a task should be clearly assigned to one person to avoid confusion and determine accountability.

Maintain Adequate Records

Good recordkeeping helps protect assets and allows managers to monitor company activities effectively.

Insure Assets and Bond Key Employees

Purchasing an insurance policy against theft ensures that assets are protected and employees handling money are bonded.

Separate Recordkeeping from Custody of Assets

Control over assets must be separated from accounting records to reduce theft risks.

Divide Responsibility for Related Transactions

Responsibility for a transaction should be distributed among multiple individuals to ensure checks and balances.

Apply Technological Controls

Utilizing technology such as cash registers and time clocks to automate and secure records.

Perform Regular and Independent Reviews

Regular audits by independent auditors help ensure compliance with internal control procedures.